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A Spin-Off to Watch

Versum Materials has good business prospects and a sturdy economic moat, but the stock may stumble out of the gate, says Morningstar's David Silver.


David Silver: Versum Materials is a new company, not yet public, that is currently a segment of industrial gas major Air Products & Chemicals. Air Products will spin off Versum soon, officially by the end of September, but likely within a month.

Versum sells gases, chemicals, and materials to help semiconductor and mobile device-makers manufacture their products, with chipmakers accounting for 85% of sales. Versum's products are indispensable in leading-edge production for chipmakers like Intel, Taiwan Semi, and Samsung, its three largest customers. We estimate that Versum's $1 billion in revenue comprises roughly 17% market share of a $6 billion global market for electronic materials.

David Silver does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.